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What is a 529 Plan?

A 529 Plan is an education savings plan run by a state or educational institution designed to help families set aside funds for future college costs. It is named after Section 529 of the Internal Revenue Code, and all 50 states and the District of Columbia sponsor at least one type of 529 plan. Some private colleges and universities also sponsor a pre-paid tuition plan.

As this description from the U.S. Securities and Exchange Commission says, these plans are essentially pre-paid tuition plans that allow college savers to purchase units or credits at participating colleges and universities for future tuition and, in some cases, room and board.
Under the scheme, a family member sets up and makes contributions to a fund, with the key advantage being the special tax benefits these plans offer, which you can read about here.